10-year fixed mortgages hit record numbers
The number of 10-year fixed mortgage products on the market has reached a record high, research has found.
According to rate monitoring firm Moneyfacts, there are now 157 options for 10-year fixed rate mortgages.
The average rate charged on a 10-year fixed mortgage stands at 3.01 per cent, a fall of 0.09 per cent year-on-year from the 3.10 per cent recorded in August 2018.
One of the latest lenders to enter the market is Newcastle Building Society, which launched two of these products this week, one available at 80 per cent loan-to-value and one at 90 per cent loan-to-value, charging 2.85 per cent and 2.89 per cent respectively. Borrowers are able to repay their mortgage after five years without penalty.
Rachel Springall, finance expert at Moneyfacts, said: “Borrowers may well be thinking of different ways to safeguard themselves from potential rate fluctuations in the market, or even for some peace of mind during a period of economic uncertainty.
“A decade-long fixed rate mortgage is no doubt a big commitment, so borrowers must feel confident that their circumstances are unlikely to change to avoid the expense of refinancing earlier than expected. There is a much larger choice of mortgages within the five-year fixed market and these should ideally be considered as an alternative.”
Bob Steel of adviser firm First Mortgage, said: “In general terms, just under one per cent of our clients take a 10–year fixed rate. Although we have seen a slight increase in the demand for a 10–year rate since the vote to leave the EU, this is usually for a very specific type of client – i.e. nearing retirement and 10 years or slightly more left on mortgage with absolutely no plans on moving.”
Steel went on to say he couldn’t “see the appeal of recommending a client to lock into a product with fairly hefty exit penalties.”
He said: “Whilst the market is moving towards longer term deals to take advantage of low long-term rates, I think the lenders need to make the exit penalties less excessive.”